Examining Industry 4.0 and Management in the Hospitality Sector

This report examines the impact and feasibility of Industry 4.0 within the hospitality sector, focusing on the role of management practices in facilitating innovation, learning, and the implementation of cyber-physical systems. The study addresses the research gap by exploring the challenges and opportunities of Industry 4.0 in the service sector, particularly within the hospitality industry. It highlights the importance of management in fostering a dynamic environment for employees to adapt to the rapid changes and demands of Industry 4.0. The report integrates literature with logical beliefs to suggest appropriate management practices for fostering innovation, knowledge management, and innovative capabilities. The report emphasizes the need for organizational structures that support flexibility, decentralization, and employee empowerment, as well as providing a case study of the hospitality sector to illustrate these concepts.

energies
Article
Examining the Feasibilities of Industry 4.0 for
the Hospitality Sector with the Lens of
Management Practice
Saqib Shamim1, Shuang Cang2,*, Hongnian Yu1,* and Yun Li3
1 Faculty of Sciences & Technology, Talbot Campus, Bournemouth University, Bournemouth BH12 5BB, UK;
[e-mail]
2 Faculty of Management, Talbot Campus, Bournemouth University, Bournemouth BH12 5BB, UK
3 School of Computer Science and Network Security, Dongguan University of Technology, Shongshanhu,
Dongguan 523808, China; [e-mail]
* Correspondence: [e-mail] (S.C.); [e-mail] (H.Y.)
Academic Editor: Huaqiang Yuan
Received: 31 December 2016; Accepted: 1 April 2017; Published: 7 April 2017
Abstract:Industry 4.0 and its impact in the manufacturing sector are well documented. However,
the service sector is understudied, and it is also facing the challenges of mass customization, digital
enhancement,smart work environment,and efficient supply chain.The aim of this study is to
fill this research gap by exploring the issues of Industry 4.0 in the service sector,with cases in
the hospitality industry.All the challenges of Industry 4.0 require continuous innovation and
learning, which is dependent on people and the enterprise’s capabilities. Appropriate management
approaches can play a vitalrole in the development of dynamic capabilities,and an effective
learning and innovation environment. This paper proposes a framework of management practices
which can promote the environment of innovation and learning in an organization,and hence
facilitate business to match the pace of Industry 4.0 by facilitating technology acceptance e.g.,
digital enhancements and implementation of cyber physical systems (CPS). This study integrates
the literature with logical beliefs to suggest the appropriate management practices for Industry 4.0.
It represents one of the initialattempts to draw research attention towards the important role
of management practices in Industry 4.0,as most of the recent studies have been restricted to
the technological aspects.Semi-structured interviews of hospitality employees are conducted to
explore the management practices suitable for meeting the challenges of Industry 4.0, specifically for
informing the service sector.
Keywords:Industry 4.0;managementpractices;learning;innovative capability;information;
knowledge management; hospitality
1. Introduction
Due to the recent technological leaps and pace of innovation, industry faces paradigm shifts,
also known as industrial revolutions [1]. The first three industrial revolutions are characterized by
mechanization, high electric energy usage, and automation and electronics, respectively [1]. Today’s
economy is heading toward the fourth industrial revolution, characterized by the use of cyber physical
systems, smart factories, and service innovations [2,3]. Germany is playing a leading role in planning
the next paradigm shift,and they came up with an idea of Industry 4.0 for the fourth industrial
revolution [2]. The concept of Industry 4.0 originates from a German government project to promote
digitalization or computerization. It is expected that implementation of the Industry 4.0 strategy can
give a boost of 267 billion euro to the German economy [4]. It does not mean that this concept is only
Energies 2017, 10, 499; doi:10.3390/en10040499 www.mdpi.com/journal/energies

Energies 2017, 10, 499 2 of 19
applicable for Germany; in fact, Industry 4.0 is becoming a general strategy for the fourth industrial
revolution, and it is being discussed by a number of researchers in different contexts and economies,
e.g., [5,6].
Industry 4.0 is a subclass of digital transformation in existing businesses and processes [7]. It is
characterized by the implementation of cyber physical systems (CPS),and smart production [3].
The main triggers of Industry 4.0 are the social, technological, political, and the economic deviations [3].
Major challenges for businesses in the Industry 4.0 environment are mass customization, effective
and efficient supply chain,getting timely information of customer needs and wants,smart work
environment, and the right combination of products and services [7]. Industry 4.0 requires flexible
processes and high efficiency of the supply chain structures. It further needs better management of
products, just in time production, and a more efficient time to market [8]. No doubt, these are very
challenging and real issues for Industry 4.0, but another challenge which is ignored by the researchers
is the development, training, and the management of people according to the Industry 4.0 environment
and requirements,as most studies only discuss the technological aspects [3]. Furthermore,in the
existing literature on Industry 4.0, most of the studies focus on only manufacturing firms, but the
service sector is ignored by the researchers investigating the issues of Industry 4.0.The issues like
supply chain efficiency, internet of things (IoTs), digital enhancement, smart work environment, and
mass customization of services are also there in the service sector. This study addresses both of these
issues by considering the Industry 4.0 concept and its impact in a people management perspective with
the focus on the service industry, specifically the hospitality sector. In the hospitality sector, customer
expectations are increasing,and the hospitality firms need to match these expectations,maintain
the level of customer satisfaction and loyalty, and improve the service quality [9]. In this scenario,
the concept of Industry 4.0 is very useful for the hospitality sector, as personalised service, efficient
supply chain, agility, smart work environment, use of big data for up to date information of customer
preferences, highly customized services at lower cost, and digital enhancement can really affect the
customer satisfaction, loyalty, and the perceived service quality.
In an uncertain environment like Industry 4.0,the key to success is training,learning,and
innovation capability [1]. Organizational training, learning, and innovations are heavily dependent
on the role of employees [3,9]. Organizations need to devise strategies according to what they want
and expect from their employees.In an environment like Industry 4.0, which is characterized by a
high rate of changes, innovations and uncertainty, firms have to be extremely sensitive towards the
changing needs and wants of their customers [3]. It is also a challenge for the employees to match with
the pace of Industry 4.0. To enable employees to work at this pace, firms need to develop and maintain
a climate of training, learning, and innovations to facilitate creative and learning work behaviour [10].
The main objectives of this study are to highlight the suitable management practices for Industry 4.0 to
facilitate learning, knowledge management, and innovative capability, by integrating the literature
and logical beliefs, and to present a case study of the hospitality sector in this context.
This study consists of two parts. The first part integrates the literature with logical beliefs to offer
a viewpoint on the appropriate management practices for compatibility with Industry 4.0 in general.
The second part focuses on the service sectors, and presents a case study of the hospitality industry,
which is based on interviews of hospitality employees.In the second part, issues of the hospitality
sector in the context of Industry 4.0 are explored. Furthermore, this study examines the management
practices in the hospitality sector and compares it with what is needed for the implementation of the
Industry 4.0 strategy by interpreting the interviews of hospitality employees.
2. Part 1: Management Practices for Compatibility with Industry 4.0
2.1. Management Practices for Industry 4.0
It is established that to be successful in the environment of Industry 4.0,organizations need
to pay attention to training,learning,knowledge management,and innovation capability [1,3].

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This can be about the implementation of cyber physical systems (i.e., computer networks, embedded
actuators, sensors, etc.), differentiation, product or service reengineering, or making the supply chain
more effective and efficient.In order to sustain smartness, innovative capability, and performance,
organizations need creative and innovative employees who are capable of working in smart, uncertain,
and competitive environments like Industry 4.0 [3]. Development of the workforce according to
the requirements and conditions of Industry 4.0 needs relevant management practices. In a broader
perspective,management means getting things done by the people [11], but it is not very simple.
Managers need to adapt the managerial practices according to the environment and desired outcomes.
In the context of this study, the environment of Industry 4.0 requires learning, knowledge management,
and innovation capability which can facilitate the technology acceptance as broader outcomes [12,13],
e.g., digital enhancements and the implementation of CPS. It is understandable that in Industry 4.0,
organizations are facing many social, technological, and economic challenges. Dynamic capabilities
and innovative employees are needed to face these challenges [3].
This study builds its arguments on the basis of assumption that the environment of Industry 4.0 is
unstable and uncertain, which requires a high level of technology acceptance for digital enhancements
and implementation of CPS,and technology acceptance can be enhanced by learning,effective
knowledge management, and innovative capability, both at the individual and organizational level.
This phenomenon is presented in Figure 1.
Therefore, this study aims at suggesting the managerial approaches which are more suitable for
learning, and the knowledge management and innovation capabilities of both organizations and their
individual employees. These management approaches are discussed below:
Energies 2017, 10, 499 3 of 18
more effective and efficient. In order to sustain smartness, innovative capability, and performance,
organizations need creative and innovative employees who are capable of working in smart,
uncertain, and competitive environments like Industry 4.0 [3]. Development of the workforce
according to the requirements and conditions of Industry 4.0 needs relevant management practices.
In a broader perspective, management means getting things done by the people [11], but it is not very
simple. Managers need to adapt the managerial practices according to the environment and desired
outcomes. In the context of this study, the environment of Industry 4.0 requires learning, knowledge
management, and innovation capability which can facilitate the technology acceptance as broader
outcomes [12,13], e.g., digital enhancements and the implementation of CPS. It is understandable that
in Industry 4.0, organizations are facing many social, technological, and economic challenges.
Dynamic capabilities and innovative employees are needed to face these challenges [3].
This study builds its arguments on the basis of assumption that the environment of Industry 4.0
is unstable and uncertain,which requiresa high level of technologyacceptancefor digital
enhancements and implementation of CPS, and technology acceptance can be enhanced by learning,
effective knowledge management, and innovative capability, both at the individual and organizational
level. This phenomenon is presented in Figure 1.
Therefore, this study aims at suggesting the managerial approaches which are more suitable for
learning, and the knowledge management and innovation capabilities of both organizations and their
individual employees. These management approaches are discussed below:
Figure 1. The conceptual framework.
2.2. Organizational Structure
In the situation where changes are very frequent, the organizational structure can play a vital
role to develop the climate for innovation and learning [10]. Organizations can range from an organic
design to a very mechanistic organizational design, on a broader continuum [14]. Characteristics of
mechanistic design are specialized task, centralized authority, and decision making; more forma
rules and rigid policies; top down communication; and many levels of hierarchy and authority. These
kind of systems are more suitable in a stable environment where changes are not very frequent [15].
The environment of Industry 4.0 is not stable, so these types of organizational designs are not suitable
for it. In fact, Industry 4.0 needs an organic organization design which is not very formal; prefers
flexible rules and policies; decentralization; empowerment of employees; collaborative team work;
and horizontal communications [15]. Innovation capability in a changing environment is more
compatible with an organic design of organization [14]. So it is rational to be in the organic paradigm
Figure 1. The conceptual framework.
2.2. Organizational Structure
In the situation where changes are very frequent, the organizational structure can play a vital
role to develop the climate for innovation and learning [10]. Organizations can range from an organic
design to a very mechanistic organizational design, on a broader continuum [14]. Characteristics of
mechanistic design are specialized task, centralized authority, and decision making; more formal rules
and rigid policies; top down communication; and many levels of hierarchy and authority. These kind
of systems are more suitable in a stable environment where changes are not very frequent [15].
The environment of Industry 4.0 is not stable, so these types of organizational designs are not suitable

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for it.In fact, Industry 4.0 needs an organic organization design which is not very formal; prefers
flexible rules and policies; decentralization; empowerment of employees; collaborative team work;
and horizontalcommunications [15]. Innovation capability in a changing environment is more
compatible with an organic design of organization [14]. So it is rational to be in the organic paradigm
of organizational design while deciding about the organizational structure for Industry 4.0. Thinking
of a single type of organizational structure for Industry 4.0 is not a rational thing to do. Industry 4.0
needs flexibility in the organizational structure, according to the needs of the situation.No single
structure is suitable for every organization.Every organization is different and accordingly needs
a different structure [3]. Some of the suitable types of organizational structures for Industry 4.0 are
discussed below:
Matrix structure:In this type of organizational structure, activities are associated with more than
one line of authority [16]. This kind of organizational structure groups the resources and people by
product and function at the same time, through dual reporting arrangements [16]. This type of structure
can respond to changing situations and uncertainty very promptly [11]. Each employee in this system
normally reports to two bosses, i.e., one line manager and one product manager [11]. This system can
also facilitate the formal linking mechanism in the organizations through joint problem solving by
functional and product managers [10]. When an employee receives the guidelines from two experts,
i.e.,one line manager and the other product expert,in this scenario there are more opportunities
for learning and thinking in a different ways.In this way,this system can be an effective source
of interdepartmental knowledge sharing as well.This is very well established in the management
literature that learning and knowledge sharing can lead to innovations, and enhance the innovative
capability of organizations and individual employees as well [17,18]. Innovativeness, knowledge, and
learning have the potential of influencing technology acceptance [12,13], so it can also facilitate the
digital enhancements and implementation of CPS. On the basis of these arguments, it is logical to
argue that the matrix structure can help the organization to match with the pace and requirements of
Industry 4.0.
Team based structure:A team based structure can be useful for Industry 4.0 settings, because it
put multiple functions and processes in a single group heading towards common objectives [16].
It facilitates organizationallearning by breaking the interdepartmentalbarriers,which leads to
enhanced generalist skills, and a speedy decision making process [19,20]. Project based teams can
especially be a really good facilitator of learning and innovation capabilities of organizations and
individualemployees [10,21], which are required in the uncertain and unstable environment of
Industry 4.0. New routines and new knowledge are essential for innovations. Frequent technological
changes are expected in Industry 4.0 and technological developments demand new technical solutions
and also the reuse of existing ones [22]. Project teams create a learning environment which facilitates
knowledge sourcing and the reuse of knowledge [23], which leads to organizational innovativeness [18]
and technology acceptance among employees [13]. On the other hand, the innovation capability of a
project team also depends on the learning goal orientation of team members [23]. So it is important
for the project managers to motivate their group members for learning. They can do so by tolerating
their mistakes, and by adopting a capability oriented supervisory style [9,24]. Therefore, it can be
argued that a team based structure can facilitate the organization to match the requirements and pace
of Industry 4.0.
Flat hierarchy:Hierarchy in any organization refers to the chain of commands and it specifies
the manager’s authority at different organizational levels [11]. In a flat organization, normally there
are fewer levels of hierarchy, but a wider span of control [11]. It means that there is a less number of
managerial levels but the number of subordinates reporting to a manager is usually high, as compared
to a tall organization. The flat structure of an organization suits an unstable and uncertain environment
because it facilitates quicker decision making due to the closeness of top management to employees [11].
This closeness also increases the participation of employees in the decision making process and other
business discussions [3]. This phenomenon of closeness and participation facilitates employee learning.

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Furthermore, in the flat horizontal structure, feedback from top management is normally quicker and
noise free [14]. On the basis of these arguments, it is very much logical to say that a flat organizational
structure is more compatible with Industry 4.0, because it aids learning and innovation in organizations
by facilitating employee participation in discussions and decision making,and through quicker
communication [3].
Decentralization:In a system characterized by decentralization, the responsibility and authority
for decision making is usually transferred to the lower staff levels.This system is typically applied
where it is believed that employees have better knowledge of the activities as compared the to top
level management, due to very frequent changes in the business environment, and there is a need for
quicker decision making.In decentralized organizations, the authority to take a decision normally
lies with the lower managerial or sometimes even non managerial staff [11]. Employees do not need
approval from the top management for ordinary matters. In the uncertain and unstable environment,
which is likely to be faced in the implementation of Industry 4.0, decentralization can be fruitful for
organizations.It enables employees to make decisions on time, and change strategy and direction
according to the change in business situations and environments.This phenomenon also provides
ample opportunities for learning for the employees,which facilitates innovation and technology
acceptance in the organization [3,13]. So it is logical to say that decentralization is suitable for the
implementation of the Industry 4.0 idea.
2.3. Leadership Style
Leadership is the art of influence others. It is inspiring, motivating, and providing the directions
to achieve the desired outcomes [11]. According to the situational theories,leadership goals and
behavioral outcomes of employees can be achieved by adapting the appropriate leadership style
according to the situation [3,25]. The importance of leadership can also be witnessed in industry;
for example, Apple Inc. is among the most innovative companies and according to many case studies it
was due to the exceptional leadership skills of Steve Jobs, instead of his technical skills. Steve Jobs knew
how to get the maximum output from his employees [26,27]. Adapting the appropriate leadership style
according to the requirements and situation of Industry 4.0 can really boost innovations and learning
in an organization both at the organizational and employee level [3]. Researchers have discussed
a number of leadership styles in relation to employee and organizational innovativeness, learning,
and knowledge management,but the most commonly discussed style is the transformation style
of leadership [28–31]. Other prominent leadership styles for innovation and learning are authentic
leadership [32] and transactional leadership [31,33]. To implement the concept of Industry 4.0, there
is a need for a more specialized construct of leadership for promoting learning and knowledge
management, which ultimately enhances organizational innovativeness and employee innovative
work behavior as well [3]. Transformational leadership consists of idealized influence, providing vision,
intellectual stimulation, and inspirational motivation [34], and it is a very well accepted construct
having several positive outcomes.Industry 4.0 needs something more than the transformational
leadership style, which should be primarily designed for learning and knowledge management, which
leads to innovativeness [3]. The initial effort to design the specialized construct for learning and
knowledge management is the development of knowledge oriented leadership [18]. Knowledge
oriented leadership is basically a combination of the transactional and transformational styles of
leadership [9]. However,the current construct of knowledge oriented leadership can be further
extended to enhance the impact and compatibility for Industry 4.0 by adding a few more factors such
as stimulating knowledge diffusion, innovative role modeling, mentoring, delegation, consulting, and
supportive behavior [3]. These leadership behaviors appear as predictors of innovation in several
studies e.g., [18,30,31]. This extended construct of knowledge oriented leadership can further facilitate
the organizations and individual employees to accelerate the strategy of Industry 4.0 in order to
face the fourth industrial revolution with more learning,knowledge,innovation capability,and
technology acceptance.

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2.4. Human Resource Practices
In order to achieve their organizational goals, companies need to develop the required skills,
capability, attitudes, and behaviors among its employees.One of the major sources of shaping the
capabilities, skills, attitudes, and behaviors of employees in any organization is its human resource (HR)
practices [35]. So, if managers want to enhance learning, knowledge management, innovativeness, and
technology acceptance, they need to design their HR strategy accordingly [36]. In a knowledge based
economy, appropriate HR practices can provide a competitive advantage to organizations. The main
HR practices are staffing,training,performance appraisal,job design,and compensation [36,37].
In order to successfully implement the concept of Industry 4.0,organizations need to design HR
practices suitable for promoting learning and innovations in the organizations.These practices are
discussed in more detail below:
Staffing:To implement the idea of Industry 4.0, managers should seek a variety of knowledge
and skills during the screening of candidates for hiring [3]. Extensive efforts should be made in
the recruitment and selection process to select the right and desired candidate for a job [38]. In the
context of Industry 4.0,innovative capability,learning,knowledge management,and technology
acceptance are the critical factors. So, during the recruitment and selection process the focus should
be on the candidate’s attributes linked with innovative behavior, knowledge management practices,
and technology acceptance [3], for example learning goal orientation and openness to experiences [12],
cognitive ability, and creative self-efficacy. These employee attributes can facilitate the implementation
of the Industry 4.0 concept, because these attributes can predict innovative capability, learning, and
knowledge management. Learning goal orientation is characterized by engagement in challenging
tasks, eagerness for self-improvement, and developing new skills, to achieve mastery [17]. Openness
to experience is a personality trait and employees who are open to new experiences normally have an
active imagination, prefer variety, their inner feelings are attentive, and they are intellectually curious,
creative, and flexible in thinking [39,40]. Cognitive ability refers to the ability of knowing, thinking,
and information processing [41], and creative self-efficacy is the self-belief that one has the ability to
do a creative task [42]. All these factors are predictors of innovativeness, learning, and knowledge
management, and should be given special attention while hiring employees in the environment of
Industry 4.0.
Training:Industry 4.0 organizations need to plan their training activities accordingly, to enhance
the innovative capability, knowledge management, and learning [3]. Focus of the training activities
should be to enable their employees to multitask. Training programs should not be limited to employee
job activities only; in fact, it should focus on increasing the skill variety among the employees [37],
for example, training for enhancing problem solving skills in general; and to enhance the technology
acceptance among employees, in order to facilitate the digital enhancements and implementation of
CPS. Team building should also be the prominent part of training programs, as it can lead to knowledge
sharing and learning [19,20]. Continuous mentoring is also essential, and special trainings for managers
are also important to enhance their ability to act as mentors,because effective mentoring has the
potential of influencing learning, knowledge management, and innovativeness [43,44]. These kinds of
trainings can help to prepare employees for the implementation of Industry 4.0, as a strategy to face
the fourth industrial revolution.
Compensation:The compensation structure for Industry 4.0 should be designed in order to
promote knowledge management, learning, and innovativeness. Employees should receive additional
or a part of their compensation based on their contribution and performance towards learning,
knowledge management, and innovations. In the given situation of Industry 4.0, it is beneficial to give
rewards for performance at the individual level, group level, and for organizational performance [3,38].
Profit sharing and incentive pay can link rewards with the performance at all levels [36]. This type
of linked compensation structures can facilitate a climate suitable for innovations,learning,and
knowledge managementat both the employee and organizationallevel, which is required for
Industry 4.0.

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Performance appraisal:The performance appraisal system of organizations has the ability to
influence learning,knowledge management,and innovations [36]. In situations like Industry 4.0,
the performance appraisal system should concentrate on employee development, behavior based,
and the result based approaches [3,36]. Feedback on the employee performance should be a routine
activity of managers.Objectivity of the performance appraisal system can motivate employees for
any particular outcome as it makes it clearer for the employee on what basis he/she is going to be
evaluated, for example, quantitative evaluation by using matrixes [3]. So, the HR managers should
devise the mechanism that links their performance with learning,knowledge management,and
innovation in a more objective manner, as these are the requirements of Industry 4.0.Establishing
the performance standards is not the only important thing, but the communication of performance
standards, performance measurement, performance comparison with the set standards, discussion of
appraisal with the employee, and taking the corrective action where required is also very important
for the effectiveness of the performance appraisal system [45]. There are different approaches for
performance appraisal in different organizations. Management by objective (MBO) is one of the most
effective and popular approaches.In this approach the objective setting and evaluation is mutual,
i.e., both employee and the manager/boss participate in the process [45]. In this system, objectives
are usually concise statements reflecting the desired outcomes.Decision making in this system is
participative, and managers normally do not assign the objectives unilaterally. They do not impose
goals on the employees.In the MBO system, managers and employees sit together and decide the
ways to achieve objectives by mutual consensus.There is a very well defined timeline for each
objective and feedback is usually ongoing, which facilitates the regular monitoring of actions and
timely corrective action where required [3,45]. This kind of performance appraisal approach can really
help the organization keep pace for Industry 4.0.
Job design:This refers to the way that tasks are organized in any position and job. It also includes
the mechanism of when and how the tasks should be done,and what are the factors having the
potential to influence the task completion process.Furthermore it also includes the condition and
climate of the task completion process [45]. Job design can play a healthy role in promoting the climate
of learning, innovations, and knowledge management in the organization [36]. So in order to facilitate
Industry 4.0, job design should be structured accordingly. Keeping in mind the importance of employee
skills variety for Industry 4.0, job design should include extensive job rotation, flexible assignments in
different areas, and extensive delegation of responsibility and authority [3]. Furthermore, it is also
important for job design to aid team building and a collaborative work environment [38]. These kind
of job designs can help the organization to adjust with Industry 4.0.
2.5. Long-Term Capabilities and Short-Term Innovations
Due to rapid technological,political,social,and economicalchanges,the environment for
Industry 4.0 is very uncertain and unstable. In such an environment, projects are normally planned
for a shorter developmental period [1]. Along with these short term projects, organizations should
not ignore the longer term perspective,because it is also crucial.Innovations are not expected to
last for a long time in such an unstable environment.So innovations should be taken as part of the
organizational routine, by developing longer term dynamic capabilities, both at the organizational and
employee level. It is possible by applying appropriate management tools according to the needs of the
situation [46]. To implement the concept of Industry 4.0, employees and the organizations should have
the capability of changing their direction as per changes in the environment, which can be facilitated
by focusing on short term innovations and long term capabilities.
2.6. Willingness to Abandon Current Investment and Knowledge
Due to a highly uncertain and unstable environment caused by frequent changes in technology,
economy, political, and social norms, the style of investment needs to be very flexible and ready to
be changed and abandoned [47]. In order to strengthen the process of innovation in organizations,

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there needs to be willingness to abandon outdated investment and knowledge,where required.
Organizations should strengthen their core competencies by acquiring the latest knowledge and
then converting this knowledge into core competencies.Learning and innovation sometimes need
to abandon the existing knowledge,skill, experience,and investment,in order to be altered by
new technologies [47], which requires acceptance among the employees. In uncertain and unstable
environments, if organizations tend to save the current knowledge and investment, in this way they
might ignore the latest methods of working and technology, which can be a major cause of business
failure [47], especially in the environment of Industry 4.0.
3. Part 2: A Case of the Hospitality Sector
3.1. Industry 4.0 and the Hospitality Sector
In this section,Industry 4.0 is discussed in the context of the service sector,by presenting a
case study of the hospitality industry.As explained in the previous section, learning, knowledge,
and innovation are crucial for successful implementation of Industry 4.0.The hospitality sector is
facing the problem of high employee turnover. When an employee leaves the organization, the skills,
knowledge, and experience of the employee also goes with the employee who quits [48]. In this way,
high turnover affects intellectual capital and the innovative capability of the organization because
of knowledge loss [49]. In this scenario,it is very logical to argue that hospitality firms need to
have special arrangements for knowledge retention,which is possible through the promotion of
knowledge management activities [9,46], which is among one of the key requirements of Industry
4.0, along with learning and innovation capability [3]. It is also important for the hospitality sector to
enhance customer experience. Knowledge management and innovation have the ability to positively
affect service quality, which leads to customer satisfaction and loyalty [46].
The upcoming fourth industrialrevolution also affects the hospitality industry because the
challenges of mass customization,smart working,and digitalization are also there in hospitality
firms. Every customer is different and demands personalized service, and it is the duty of hospitality
employees to provide customized service [50]. This study investigates these issues in the hospitality
sector, and also discusses the management practices in the context of Industry 4.0.
3.2. Methodology
To evaluate the hospitality sector in the context of Industry 4.0, semi structured interviews of four
and five star hotel employees, working at different levels were conducted. It was done by using the
snowball sampling technique; in simple terms, it is also known as chain referral sampling, in which
one participant refers to the other potential participant. Initially, 77 hotels were contacted to request
employee participation by sending the request letter by email and also by personal visits.Due to
the very low response rate,one of the authors then personally visited four and five star hotels in
Bournemouth and London to directly contact employees. After getting positive responses from several
employees, the snowball sampling technique was applied. In this way, 10 interviews were recorded
with the permission of participants from five hotels.Among the participants,four are front line
employees, four are shift managers, and two are senior managers. On the request letter, the purpose of
the interview was well explained, and the statement of anonymity of information was also there in the
request letter.
The concept of Industry 4.0 was explained to each participant before asking any questions.
Then questions related to the challenges of Industry 4.0 and the management practices were asked,
to evaluate the preparedness and compatibility of the current situation in the hospitality sector with
Industry 4.0. Each question leads to several sub questions, and the exploration of important factors in
the given context. The interviews are interpreted by using the descriptive approach. The summary of
the participants is presented in Table 1.

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Table 1. Interview participants.
Hotel ID Hotel
Category
Number of
Interviewees
Front Line
Employees
Shift
Managers
Senior
Managers
Hotel 1 Four star 1 1
Hotel 2 Four star 2 1 1
Hotel 3 Five star 4 2 1 1
Hotel 4 Four star 2 1 1
Hotel 5 Five star 1 1
3.3. Findings
With the help of the semi structured interviews of hospitality employees, firstly the main issues
and challenges of Industry 4.0, which are also relevant to the hospitality sector, are examined. Mainly,
these issues are mass customization, efficient supply chain, and digitalization. These are explained in
detail below:
3.3.1. Mixture of Customization and Standardization
Based on the findings from the interviews, it should not be argued that the hospitality industry
is focusing solely on customization or standardization.They are actually doing both.Most of the
international chains are following a uniform approach globally, for example, the very formal style
of communications.On the other hand,there are highly customized packages for the corporate
customers. However there are situations when employees provide customized services due to other
factors. For example one of the interviewees said: “When my boss is absent, I can provide customized
service more easily”.
Similarly, several other interviewees argued that the empowerment of taking decisions helps them
to alter services according to the customer and current situation. The delegation of responsibility and
authority makes the employee feel more empowered, which is actually motivating them to provide
customized solutions.This is also one of the needs of Industry 4.0, to provide customized services.
On the basis of these findings, it can be argued that the delegation of responsibility and authority, less
monitoring by supervisors, together with empowerment encourages employees to do the random
customization of service.
Customization exists in the hospitality sector, like providing different types of rooms, food, and
other facilities to customers. For example, customers are asked at the time of booking about preferences
like the type of room, food, and other room services. These are arrangements of providing different
hospitality experiences to different customers, but it cannot be called mass customization. In fact, it is
a sort of standardized customization.
Figure 2 summarizes the discussion and shows how the delegation of authority along with less
monitoring can empower the employee and promote random customization of services. It suggests
revisiting the supervision level and intensity in the hospitality firms in order to foster customization
of services.
Energies 2017, 10, 499 9 of 18
3.3. Findings
With the help of the semi structured interviews of hospitality employees, firstly the main issues
and challenges of Industry 4.0, which are also relevant to the hospitality sector, are examined. Mainly,
these issues are mass customization, efficient supply chain, and digitalization. These are explained in
detail below:
3.3.1. Mixture of Customization and Standardization
Based on the findings from the interviews, it should not be argued that the hospitality industry
is focusing solely on customization or standardization. They are actually doing both. Most of the
international chains are following a uniform approach globally, for example, the very formal style of
communications. On the other hand, there are highly customized packages for the corporate
customers. However there are situations when employees provide customized services due to other
factors. For example one of the interviewees said: “When my boss is absent, I can provide customized
service more easily”.
Similarly, several other interviewees argued that the empowerment of taking decisions helps
them to alter services according to the customer and current situation. The delegation of responsibility
and authority makes the employee feel more empowered, which is actually motivating them to
provide customized solutions. This is also one of the needs of Industry 4.0, to provide customized
services. On the basis of these findings, it can be argued that the delegation of responsibility and
authority, less monitoring by supervisors, together with empowerment encourages employees to do
the random customization of service.
Customization exists in the hospitality sector, like providing different types of rooms, food, and
other facilities to customers. For example, customers are asked at the time of booking about
preferences like the type of room, food, and other room services. These are arrangements of providing
different hospitality experiences to different customers, but it cannot be called mass customization.
In fact, it is a sort of standardized customization.
Figure 2 summarizes the discussion and shows how the delegation of authority along with less
monitoring can empower the employee and promote random customization of services. It suggests
revisiting the supervision level and intensity in the hospitality firms in order to foster customization
of services.
Figure 2. Facilitators of the random customization of service.
3.3.2. Supply Chain Efficiency
In the service sector, supply chain refers to the sequence and arrangement of processes to
provide services. It is another challenge for Industry 4.0, which exists in the hospitality sector.
According to the information provided by the participants, the hospitality sector is doing well in this
context through incrementalinnovations and technologicaladvancements.Due to advance
Figure 2. Facilitators of the random customization of service.

Energies 2017, 10, 499 10 of 19
3.3.2. Supply Chain Efficiency
In the service sector, supply chain refers to the sequence and arrangement of processes to provide
services.It is another challenge for Industry 4.0, which exists in the hospitality sector.According
to the information provided by the participants, the hospitality sector is doing well in this context
through incremental innovations and technological advancements. Due to advance technologies and
the Internet of Things (IoTs), the supply chain process is becoming very efficient and smart. Hospitality
firms now have their own mobile apps for booking and other services. Hotels are linked with different
third party booking websites offering different options and packages for different hospitality firms,
for example www.booking.com, and www.skyscanner.com, which is actually a collaborative supply
chain,and makes the supply chain process more smart and efficient.Many customers who are
comfortable with the use of technology,are adopting the smart self-service options provided by
hospitality firms, for example in hotels, controlling everything with your phone, like the electronic key
in a mobile app that eliminates the need of going to the reception and asking for keys.
3.3.3. Digitalization
Digitalization is happening in the hospitality sector, and it is also being rewarded in different
ways. Digitalization at the work place refers to the integration of digital technology in routine work.
It is the conversion of information to the digital format.Based on the findings of the interviews,
the hospitality sector is focusing on digitalization to generate long term capabilities for more effective
and efficient business intelligence.Information systems are given considerable importance in this
context. According to the information provided by participants, firms are using multiple information
systems. Customer information is entered and updated in the system.Firms try to collect the
maximum information of clients which helps in many ways, for example with supply chain issue,
as there is no need to repeat certain processes in the case of a repeat customer, because the system
automatically generates everything on the customer app.It saves time for both employees and
customers and enhances supply chain efficiency. The style of information presentation in the system is
also important, as effective and clear presentation motivates the employees to understand multiple
sources of information.For example, one of the participants said that:“Availability of information
in shape of a graphicalform helps her to learn new knowledge by understanding the patterns
of information”.
In this way,the effectiveness and efficiency of information systems is helping the hospitality
employee to learn new things.Some of the participants also acknowledged the role of information
availability in idea generation and innovative thinking. It is also acknowledged by interviewees that
the availability of such a system helps them to be prepared for any type of customer query and they
feel more proactive and confident due to the availability and clarity of information.In this way it
can be argued that the availability and clarity of information enhances the effectiveness of a system,
which ultimately leads to employee learning, innovative capability, and technology acceptance, e.g.,
digital enhancements.
Figure 3 presents the summary of the idea how the availability and clarity of digital information
influences learning; and innovation capability through information system effectiveness, and how this
phenomenon ultimately enhances the compatibility with industry 4.0. If hospitality firm ensures the
availability of clear digital information and information system effectiveness, they can enhance the
learning experience of employees which increases the innovation capability.

Energies 2017, 10, 499 11 of 19
digital enhancements.
Figure 3 presents the summary of the idea how the availability and clarity of digital information
influences learning; and innovation capability through information system effectiveness, and how
this phenomenon ultimately enhances the compatibility with industry 4.0. If hospitality firm ensures
the availability of clear digital information and information system effectiveness, they can enhance
the learning experience of employees which increases the innovation capability.
Figure 3. Availability of clear information and compatibility with Industry 4.0.
3.4. Management Issues of the Hospitality Sector in the Context of Industry 4.0
On the basis of information provided by the participants in interviews, the descriptive approach
is used to identify the major management issues in the hospitality sector. As mentioned earlier, this
Figure 3. Availability of clear information and compatibility with Industry 4.0.
3.4. Management Issues of the Hospitality Sector in the Context of Industry 4.0
On the basis of information provided by the participants in interviews, the descriptive approach is
used to identify the major management issues in the hospitality sector. As mentioned earlier, this study
builds its arguments on the basis of the conjecture that the successful implementation of Industry
4.0 concepts depend on learning, knowledge management, and innovative capability, so the factors
affecting these key variables for Industry 4.0 are discussed below with the help of interviews of
hospitality employees.
3.4.1. Providing Vision
One of the common factors among hospitality employees found in this study is the lack of
vision. On asking the question about the use and interest in different types of information and
knowledge,most of the employees are interested in the information and knowledge relevant to
their own department and job in the broader perspective.For example, employees working in the
marketing department are not interested in financial information and knowledge.On asking why
they are not interested in financial information and knowledge, they said that it is not relevant to
them. On asking follow-up questions on this,it is found that their vision for their career growth
is limited to a high position in the marketing department,and they are not expecting themselves
to be among the top management of the organization in the future.In this case,it is the lack of
vision which is hindering the interest of employees for gaining knowledge which can be helpful in
the future.As visionary employees,they should consider themselves as potential candidates for
some top organizational positions in the future.This problem is very much related to leadership
in the organization.As discussed earlier in part 1 of this study, leadership plays an important role
in providing vision, especially the transformational style of leadership.Providing vision is one of
the main factors in the construct of transformational leadership [50]. This problem indicates some
leadership issues in the hospitality sector.Based on these findings, it can be argued that due to the
lack of providing vision from the leadership,employees are not very visionary and hence do not
show interest in additional interdepartmental information and knowledge, which ultimately hinders
innovative capability.
Figure 4 highlights the important role of leadership to provide a clear and motivating vision
to the employees.Broader vision can increase the interestof the employee in additionaland
interdepartmental information and knowledge,and enhances the innovative capability,which is
required to meet the requirements of industry 4.0.

Energies 2017, 10, 499 12 of 19
from the leadership, employees are not very visionary and hence do not show interest in additional
interdepartmental information and knowledge, which ultimately hinders innovative capability.
Figure 4 highlights the important role of leadership to provide a clear and motivating vision to
the employees.Broader vision can increasethe interestof the employee in additional and
interdepartmental information and knowledge, and enhances the innovative capability, which is
required to meet the requirements of industry 4.0.
Figure 4. Providing vision leading to Industry 4.0 compatibility.
3.4.2. Not a Preferred Career Choice
Another major concern found during this investigation is that most of the employees, especially
the front line employees, do not prefer a long term career in the hospitality sector. This is also reflecte
by the high employee turnover of the hospitality sector [48]. This problem is a major issue which is
related to the HR management strategies. Due to lack of preference as a career choice, many
employees do not want to learn and grow in this industry. They do not want knowledge to increase
their innovation capability and problem solving skills in the industry because they do not consider it
Figure 4. Providing vision leading to Industry 4.0 compatibility.
3.4.2. Not a Preferred Career Choice
Another major concern found during this investigation is that most of the employees, especially
the front line employees,do not prefer a long term career in the hospitality sector.This is also
reflected by the high employee turnover of the hospitality sector [48]. This problem is a major issue
which is related to the HR management strategies.Due to lack of preference as a career choice,
many employees do not want to learn and grow in this industry.They do not want knowledge to
increase their innovation capability and problem solving skills in the industry because they do not
consider it as a long term career.For example,on asking a question about gaining knowledge to
enhance innovative capability, one participant said that “I do not want to do extra work and gain extra
knowledge, other than required to perform my current job, because I do not want to pursue career in
the hospitality sector”.
On the basis of these findings it can be argued that career preference negatively affects the interest
in learning and knowledge and also hinders the innovative capability of the hospitality firm and
individual employee.
Figure 5 explains how the career preference affects the innovative capability by influencing
the interestin knowledge and learning. A preferred career influences the tendency to gain
additional knowledge and learning which leads to innovative capability,which is much needed
in the environment of industry 4.0.
Energies 2017, 10, 499 12 of 18
as a long term career. For example, on asking a question about gaining knowledge to enhance
innovative capability, one participant said that “I do not want to do extra work and gain extra
knowledge, other than required to perform my current job, because I do not want to pursue career in
the hospitality sector”.
On the basis of these findings it can be argued that career preference negatively affects t
interest in learning and knowledge and also hinders the innovative capability of the hospitality firm
and individual employee.
Figure 5 explains how the career preference affects the innovative capability by influencing the
interest in knowledge and learning. A preferred career influences the tendency to gain additional
knowledge and learning which leads to innovative capability, which is much needed in the
environment of industry 4.0.
Figure 5. Role of career preference.
3.4.3. Non-Interactive Trainings
Different types of trainings are being provided to the existing and new employees in the
hospitality sector. This is also an important role of the HR department. The most common type of
training highlighted during interviews is the online training manuals. Employees are provided with
different electronic training manuals for routine jobs, new projects, or products, and for the ne
Figure 5. Role of career preference.